Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Describe the product life cycle, Question: Your organization has recent...

Question: Your organization has recently set up an advisory unit for assisting small and medium enterprises. You have to advise a small company about its product portfolio. Pre

Choosing the advertising messages, Choosing the advertising messages: T...

Choosing the advertising messages: The task now is to translate all of the objectives into a specific advertising message to meet the goals. Advertising companies very in their

Produce an initial marketing strategy , Question 1 Read the CASE STUDY ...

Question 1 Read the CASE STUDY ' Selling the idea' below and then do the following. Produce an initial marketing strategy to develop appropriate geographic areas into targe

Case study, Should video game companies continue to alter their products to...

Should video game companies continue to alter their products to include other functions such as email?

Describe the one-way communication, Describe the one-way communication ...

Describe the one-way communication By recognising different transactional and relationship needs of the target audience, marketing communications can be used to engage with a v

Explain the thinking of public about the public relations, Explain the thin...

Explain the thinking of public about the public relations. The public often think of public relations like a glamorous job. These relations people seem to have been tarred alon

Define the size of ad-budget, Q. Define the Size of Ad-Budget? Size of...

Q. Define the Size of Ad-Budget? Size of Ad-Budget : If amount of advertisement budget is more at that time costly media like national dailies, television and popular magazine

What are the factors to determine the consumer behaviour, What are the fact...

What are the factors to determine the consumer behaviour? Consumer Buying Dynamic or Determinants of Consumer Behaviour: There are four factors which determine the consum

Wants, Wants, needs and demands Needs: Human needs are the most fun...

Wants, needs and demands Needs: Human needs are the most fundamental concept underlying marketing.  A human need is a state of felt deficiency. 1). Humans have many comp

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd